You Won’t Believe the Next Hot Luxury Real Estate Markets (We Didn’t Either)

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Where are wealthy home buyers dropping their giant wads of cash? No, it’s not primarily New York, Los Angeles, or the rest of the nation’s glamorous big cities. And forget those chic beach and ski resort destinations. You’ll be surprised by the new luxury real estate markets to watch.

The places generating interest from the richest 1% are all smaller inland markets, according to a recent Coldwell Banker report. The top market, Boise, ID, is better known for its potatoes than its real estate. But the City of Trees is “a budding metropolis for affordable luxury,” according to the report.

To come up with its findings, Coldwell Banker teamed up with the Institute for Luxury Home Marketing and analyzed factors such as job and population growth, days on market, median list price, the number of homes for sale, and the sales price-to-list price ratio.

“The surprise has been the expansion of the affluent sector into mid-sized markets,” Coldwell Banker President and CEO M. Ryan Gorman said in a statement included in the report. “Part of this is due to wealth migration from higher-tax states to lower-tax states. These secondary luxury markets represent new pockets of opportunity.”

Boise, with its stunning mountain views and a growing tech sector, has been attracting droves of Californians and other priced-out West Coasters over the past few years. Many are selling their homes in expensive areas and coming to Boise with enough money to purchase a larger or fancier home—and still have plenty left over. But that surge of new residents is driving up prices in the once-affordable city.

In the metro area, the median home list price was $375,000 as of Feb. 1, according to realtor.com® data. (The metro area includes surrounding towns, suburbs, and smaller cities.) Wealthier buyers are purchasing $1 million-and-up, newly constructed condos downtown or larger houses in the foothills.

“Luxury buyers include those migrating here because they are now able to buy for cash, and ‘virtual workers’ who want to spend part of the year here,” Bob Van Allen of Coldwell Banker Tomlinson Group in Boise said in a statement included in the Coldwell Banker report.

The other luxury markets to watch were Charlotte, NC, a growing financial hub that’s becoming more popular with retirees; Colorado Springs, CO, which has been attracting folks priced out of Denver; Cincinnati, a river city that has been undergoing a revival; and Fort Worth, TX, which has become a less expensive alternative to Austin, TX.

America’s top luxury markets today

Upscale Malibu, CA, was last year’s top-performing luxury real estate market—despite the wildfires that ravaged the tony community in late 2018. The fires forced evacuations and tore through homes and businesses. Celebrities such as Miley Cyrus and Robin Thicke reportedly lost their homes in the fire.

But residents have refused to abandon the seaside enclave outside of Los Angeles. The median list price was about $4.2 million in February, according to realtor.com data. And it represents a 7.8% increase since February 2018, months before the fires.

“Since 1988, I’ve seen several different fires,” Irene Dazzan-Palmer of Coldwell Banker Realty in Malibu said in a statement included in the report. “But none have stopped the real estate boom, including this one.”

Malibu was followed by the perennially popular beach town of San Diego; Austin, TX, a funky college town and state capital that’s become a tech hot spot in the South; and Arlington, VA. Amazon’s second headquarters will be based in Arlington, a suburb of the nation’s capital of Washington, DC. That may explain the rising prices, as buyers want to get into the market before highly paid Amazon employees flood the area.

The most—and least—desirable home features

Affluent buyers were most likely to want home automation and outdoor living spaces in their new properties, according to a survey of 22 Coldwell Banker Luxury Property Specialists. They also tended to prefer open-concept floor plans, office or flex space, and new construction.

“With everyone working on laptops and being so mobile, I’ve found that many of my luxury listings must have a component that is multipurpose and multifunctional,” Tracy Allen of Coldwell Banker Pacific Properties in Honolulu said in a statement included in the report. “Dining rooms can double as conference rooms; you can have a business meeting in the dining room, then put your laptop away, and lunch is served.”

Meanwhile, the least wanted features were tennis courts and indoor pools. And about a third of respondents also said large homes—a hallmark of the rich and famous—are falling out of favor.

That may be because many baby boomers prefer to downsize rather than deal with the maintenance of an expansive property as they age. Meanwhile, many millennials are more interested in living in a desirable location than having a big house. We’ll have to wait and see if that trend actually materializes.

“New trends are on the horizon: Eco-friendly and wellness-focused design is in for 2020, and larger homes aren’t always preferred like they once were,” Ricardo Rodriguez, a luxury property specialist with Coldwell Banker, said in a statement. “Now that energy-efficient technologies are widely available, the expectation of a green-certified building is growing.”

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